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I’ve been thinking about a system that allows you to publicly destroy bitcoins to let people build networks with some protection against Sybil attacks other than the difficulty of getting IPv4 addresses. As an alternative to destroying the coins, I’ve been thinking of giving all but one satoshi to the node that includes the transaction into a block. I mean, as long as you don’t control more than 10% of the network, it won’t really change how much it costs you to “destroy” coins.

Here’s the problem: Suppose a node creates one of these transactions, but doesn’t broadcast it. Instead, they wait until they manage to include it into a block, then broadcast the block. Even if they only control 0.1% of hashing power, they can find the block in about a week.

I can’t think of a good solution to this. Can you?

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There can be no solution.

Even if you managed to solve the "allowing only nodes with %<X problem" (and I doubt it is feasible), you wouldn't solve anything, since one single person can create two small nodes, but he is actually owner of both (i.e. controls a combined hashpower).

  • Sure, but what about the second problem? That seems like it requires two orders of magnitude less hashpower, and is much more likely to succeed. – Nick ODell Feb 11 '13 at 16:23
  • @NickODell I don't understand, you are worried that someone includes a transaction with a high fee in a block he himself mines? What would be the point? – o0'. Feb 11 '13 at 16:25
  • To make it appear that he is "destroying" bitcoins by giving them to whoever mines the block, but actually giving them back to himself. The alternative would be to force people who want to prove their trustworthiness actually destroy the coins, which would be more secure, but wouldn't give an extra incentive to miners. – Nick ODell Feb 11 '13 at 20:23

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